Home, Sweet Digital Home

We love our media – movies and music, home video and photos. And we love to watch and listen at home. Our houses are full of media devices – DVD and CD players, radios and portable music players, and, of course, PCs stuffed with our photos and music and videos.

But the devices are in control: we need to go to the appropriate box in order to enjoy our media – to the living room to play a movie on DVD, to the family room to play music on CD, to the study to view a photo slide show on the PC.

"There is a tremendous amount of digital content coming into the home," says Gary Hughes, CEO of Quakerbridge Executive Center-based Digital 5 Inc., "whether it is music, photographs, or videos, and that content is coming from portable devices, from optical disc, from terrestrial sources, antenna and satellite, and from the Internet."

There has to be a better way to deal with this profusion of options, especially in these days of wireless networking, to provide Internet access and share PC files around the home. This is the promise of the "digital home" – with connected computer and consumer electronic devices, so you can access your DVD player from the bedroom TV to finish watching the movie, or access your CD changer from the kitchen radio to listen to music, or connect to your PC from the living room display to view photo shows.

"We are rerouting that content over to your television," says Hughes, "so you can sit down and watch the movie, where you want." And especially with all the options for buying and subscribing to content online, "people would be watching a lot more movies," he says, "if they had a technology that wouldn’t tie them so tightly to the PC."

Sounds interesting, but also confusing – these devices are complicated enough already – with all the different types of physical discs and media and the profusion of computer file formats, plus troubleshooting network connections, and the additional confusion of new content protection mechanisms. Now we’re talking about connecting these boxes, and bridging the worlds of consumer electronics and computers.

This new world is just as messy and confusing to the consumer electronics companies that are developing these kinds of products. Industry groups and consortiums are developing guidelines and standards to try to help devices interoperate, but there are so many details to manage, from networking to user interfaces to compression formats. For example, Intel estimates that there are more than 70 separate industry standards and protocols involved in these devices.

"We see tremendous opportunity to help content providers and device manufacturers," says Sebastian Pistritto, vice president of marketing of Digital 5. "They can securely take content, bring it into the home, and manage and redistribute it throughout the home, so that it is seamlessly accessible for the consumer."

No wonder consumer electronics companies turn to a company like Digital 5 to develop this kind of messy "middleware" software for their devices, to distribute and play audio, video, and photo content among networked consumer electronics devices throughout the connected home.

For consumers, Digital 5 is about accessing media content over a home network and the Internet to enjoy music, video, and photos from any convenient location. For consumer electronics companies, the Digital 5 software adds new capabilities to existing devices such as DVD players, televisions, and stereo systems, allowing them to interoperate in the connected home. And for content providers, Digital 5 makes the content more accessible by enabling secure sharing among wireless and wired networked consumer electronics devices.

To make all this more tangible, let’s look at examples of different kinds of networked devices that are currently available using the Digital 5 software:

Audio Player. To share CD and Internet radio, use a box like the Netgear MP101 Wireless Digital Music Player (www.netgear.com). You can plug in headphones directly to the box, or connect your stereo system by running standard RCA audio cables to an auxiliary input on your amplifier. Use the remote control and four-line LCD display to browse and select music saved on your PC, or streamed over the Internet.

The MP101 receives the music from a Digital 5 Media Server application running on your PC, either over a standard network cable, or through the air using a 802.11b or 802.11g wireless network. You can play music files that you have copied from CD, in standard MP3 or WMA (Windows Media Audio) formats. You also can the thousands of radio stations that broadcast over the Internet, some free, and some subscription (i.e., for commercial-free listening).

Digital 5 also has developed relationships with music service content partners such as RealNetworks Rhapsody (www.rhapsody.com) and Radio@AOL (music.channel.aol.com), so Netgear can offer trial subscriptions with the product. (To show the growing interconnection of these worlds, Radio@AOL is free for AOL members, and offers access to XM Satellite Radio.)

Audio/Video Player. To also share video to a television, move to a device like the Netgear MP115 Wireless Digital Media Player, released in November, 2004. Just connect it to an auxiliary input on your television using standard video and audio cables (composite, component and S-Video), and use the remote control to browse your media using the on-screen menu.

You can play videos, show photo slide shows, and listen to music, all streaming from your PC or over the Internet. The MP115 supports a variety of image formats and standard MPEG video formats including DivX.

DVD Player. The next step is to do away with a separate box, and integrate these viewing functions into an existing component, like the GoVideo D2740 Wireless Media Receiver + DVD Player, introduced in March, 2005 (www.govideo.com). Now your DVD player does double duty as a networked media player, sharing the same connection to your TV display so you can watch DVDs or access remove video and music.

These devices are complicated, so Digital 5 has expanded its role from supplying software to the helping its customers with the whole end-to-end process – helping consumer electronics companies design, manufacture, and market these products. Working with internal development groups in these companies, says Pistritto, "we add a lot of value, because we are dealing with all the different constituents. We have the technology relationships, we have partnerships with technology providers, content providers, even with the retail channels."

Given a customer’s requirements for functions, content formats, market, and cost, Digital 5 will help identify chip vendors and board manufacturers to build the product, and even provide information on retail and distribution channels to promote and sell it.

The Digital 5 headquarters office houses some 35 people, including the core development group and corporate staff, along with quality assurance and technical support. It has small sales and marketing groups in Santa Clara, California, and Japan, close to the major consumer electronics companies that are its customers. The company expanded in the summer of 2004 when it started a development group in India, now with 20 people also doing customization and quality assurance.

Digital 5 was founded in 1993 by Ari Naim as Sycom Technologies. Then it developed, manufactured, and distributed digital voice recorders and MP3 players (U.S. 1, May 27, 1998). In 2000 one of Sycom’s investors hired Ron Stevens to shore up the company’s fortunes. Stevens had founded four previous companies, so he renamed this one Digital 5 (U.S. 1, May 2, 2002). Stevens went from licensing chips to manufacturers to developing software and systems for networked DVD players and connected media devices.

Stevens resigned for personal reasons in 2003, and Jodie Hughes (no relation to Gary Hughes) was named president and CEO in November, 2003. Jodie Hughes was previously president and COO of TeleCruz Technology, which developed chips and software for interactive TV, and had held executive positions at Sony Electronics, Western Digital, and Sigma Designs.

Digital 5 then received its most recent $8.4 million round of funding in April, 2004 (with $23.4 million in total capital to date). At the same time, the company also received an investment from Intel Capital in support of digital home technology. Mike Harris, who had joined Digital 5 as chief technology officer in late 2002, became president. Harris was previously vice president of global software strategy for STMicroelectronics, and CTO of Ravisent Technologies, which he founded in 1994.

Harris left Digital 5 in June to pursue other ventures, and Gary Hughes, who had been chairman for the past year, is now also serving as CEO. Hughes was previously president and CEO of PowerGenix System, COO at Gigabit Optics, vice president and general manager of network products for Adaptec, and held president and chief executive officer positions at Certicom Corp. and Photonics Corp.

Pistritto joined Digital 5 in early 2004 as vice president of marketing. He had previously been director of corporate marketing programs for enterprise content management firm IXOS Corporation, and vice president of corporate marketing at Ravisent Technologies. He also had held leadership positions with Real Media, Bentley, Ford Aerospace, Dupont, and Analytical Graphics.

But Pistritto was originally an engineer. "I’ve just always been very technical," he says, "very methodical. It was just a natural progression to go into the engineering discipline. I was very good at math, at formulas. It seemed in college when I got the fundamentals of chemistry down, the math and the equations, things just made sense to me. I understood why the wire used in houses is copper."

"As I started in engineering at Ford," he says, "I noticed that techies were techies, and businesspeople were businesspeople, and techies had a very condescending view of businesspeople. What seemed to be missing was someone who could straddle the fence, someone who had a technical background, and could really articulate things and understand the business side." He has found this dual role to be valuable in every organization. "I don’t think I’m unique," he says, "a lot of the business and marketing people I meet in other companies have technical backgrounds, because at the end of the day we’re positioning technical products."

Graduating with a BS degree in electrical engineering from the University of Delaware in 1987, he refocused on business by earning a BS in business administration, management information systems, from Wilmington College in 1992.

So what’s next for the digital home? These current products are clearly just the beginning, as new devices enable more content, wider sharing, and aggregated storage:

Premium Content. Digital 5 is working with additional content partners like CinemaNow, Starz!, Movielink, and Yahoo! to offer more premium content options, which Digital 5 can offer both as options for new customers and as possible upgrades for existing products.

Supporting premium content also requires appropriate Digital Rights Management (DRM) technology to protect the digital content, encrypting it to prevent unauthorized use. Digital 5 has worked with Microsoft to support Windows Media DRM for Windows Media Video (WMV) clips, as used in many online music stores (but not for Apple’s iTunes). Digital 5 also has worked with Intel to support Digital Transmission Content Protection over IP (DTCP-IP) for passing different kinds of protected content over networks in a common format. As these technologies are implemented in playback devices, content providers can be assured that their encrypted clips are protected not only on the PC, but also during transmission over the home network for playback, to be decoded only at the final display device.

Portable Devices. These connections and content protect mechanisms also now extend to portable devices that allow content to travel outside the home. "If I bought that song," says Pistritto, "and downloaded it on a local PC, I should be able to listen to it upstairs, and put it on a portable MP3 player and take it with me."

Integrated Devices. The next step is integration of these new functions into existing devices. "The integration comes together as we roll into 2006," says Pistritto. "Nobody wants additional products, another box, another remote control in your living room. You really just want the end result."

"We will see core functionality integrated into the back of televisions," he says, "integrated DVDs, integrated set-top boxes. Traditional analog AM/FM receivers will start to see a digital content stream." The consumer just wants to listen to the music, and does not want to care whether it happens to be a local radio station, or streaming over the Internet. To the consumer, "it’s not my problem," says Pistritto, "it’s your problem now, that’s why I bought the product."

Universal Sharing. And there’s more than just playback – these devices also can share among each other, without needing a PC. A DVD player can become a source of content to distribute the disc back over the network, to other consumer electronics devices, or even for viewing on a computer. This is the larger promise of Universal Plug and Play (UPnP, www.upnp.org) – an industry standard that allows devices to connect in ad hoc networks to discover each other and share content across a local network.

You also may have seen similar ideas for sharing PC media files in the Microsoft Windows XP Media Center (www.microsoft.com/windowsxp/mediacenter), an upgraded PC design for viewing media from the living room couch, that also supports access from remote Media Center Extender devices. Other player devices include support for Windows networking, so you can browse and view your shared My Music, My Pictures, and My Videos files (there’s an Microsoft Xbox application that supports this too).

Even better, Microsoft has released the Windows Media Connect option for Windows XP that acts as an UPnP server, so you don’t need a special Media Center system, and can connect to any new UPnP device. New player software like InterVideo WinDVD 7 also is adding support for UPnP, to play media on your PC from other computers and compatible consumer electronics devices.

Home Servers. And why use one of your working PCs to host all these media files anyway? Instead, use a dedicated disk server, which can be available for shared storage and backup, at any time, and from any system anywhere in the house. "We are seeing the need to store and aggregate content separate from the PC," says Pistritto. "The server can scan the local hard drive and networks and aggregate all the available content, build it into playlists, and expose those to devices on the network."

For example, Digital 5 is working with TDK Corporation and other companies to develop home network attached storage (hNAS) devices that can offload your home PCs and laptops as stable central storage, and also serve as a media server to any UPnP device. "Now my content is securely backed up," says Pistritto. You don’t lose your music when the PC crashes, or lose access when someone else is busy using the machine. The NAS device just attaches to your home network, wired or wireless, sharing with all compatible computer and consumer electronics devices in the home.

In the Digital 5 vision, "devices will talk to each other, and go directly to the Internet bypassing the PC," says Pistritto. "They are accessing content, aggregating content, developing a unified view of all your content in the home, and giving you access to it all."

"We believe it is a huge market," he says, "by 2008 over 30 million households will be using some kind of digital media adapter that will have access to the Internet and other networked content, and be able to display it on TV."

"What brought me here," says Pistritto, "was understanding the value of a potentially big market that we could contribute to. It makes a lot of sense that somebody like Digital 5 could be very successful doing those kinds of things."